Consumer prices are no longer rising. In the US in the past two months, they have been flat. There’s more non-inflation to come as sharply lower commodity prices work their way through the economy. Indeed, taking the declines in house and other asset prices into account, total price levels are probably falling in the US. The story is similar in most of the world.

On the other hand, fear of deflation—a spiral of declining prices and wages—should start to fade. The world’s monetary and fiscal authorities are no longer shy about using their ultimate weapon—infinite borrowing capacity—to keep the financial system in operation. That means money is being thrown into the banking system as if there is no possible inflationary tomorrow to worry about. Measures of money supply growth, which had been slowing sharply, look to be rising again.

Right now, that money isn’t being spent. It is going onto bank balance sheets, where it is compensating for losses from falling asset prices. With wages and lending both under pressure, those prices could fall further—more broad disinflation.

But look ahead to better times—once the credit system is righted and the recession draws to a close. Then banks will have strong balance sheets (thanks to the monetary flood), ready to ease credit conditions as growth accelerates. It’s almost a recipe for higher prices.

In theory, governments will do everything they can to promote price stability. But even if they want to—and they might not actually regret the way inflation erodes the value of their debt—they’ll have to move much faster to raise rates and restrict lending than they have in recent recoveries.

Government 10-year bonds yield 4% in the US and 4.1% in Germany. If higher inflation does come, bond investors will be caught by surprise. They trust the authorities to keep the monetary system in good order—just as they trusted them to keep the financial system on an even keel.